Dixons Carphone has smashed analysts’ forecasts as sales surge across the UK and the wider group. Here is what the analysts say.

It is clear now that one of the main reasons why Ao.com is finding UK trading “challenging” is because their great rival Dixons Carphone is hoovering up market share, as Dixons Carphone have blown away expectations for today’s fourth-quarter trading update.

Though Nordics like-for-like sales growth of 1% was slightly disappointing, Southern Europe like-for-like sales were up by as much as 8% (the City expected it down 6%), as the business in Greece continued to do surprisingly well.

Nick Bubb, independent analyst

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A strong end to the year leaves a modest upgrade to consensus forecasts, with management well placed to accelerate investments in the business in FY16 to improve the proposition and continue restructuring.

UK like-for-likes were the standout performer, with mobile driving more than its fair share of growth and electricals outperforming a subdued wider market.

Alistair Davies, analyst at Investec

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Connected World Services, which accounts for 2% of group sales, has a strong pipeline of new deals so we expect good growth in 2015 and, group gross margin should improve given the stronger Christmas and new year trading.

In terms of the recent share price performance, up 14% in the last month, this was due in our view to the expectations that Dixons is significantly outperforming the UK market across most large and small electrical categories and mobile.

We believe Dixons Carphone UK has outperformed John Lewis’s Electricals and Home Technology total sales by 13% points. John Lewis electrical sales fell on average by 1.5% over the same period and probably reflects Dixons improved customer service and use of iPads in-store to facilitate sales. This year Dixons Carphone UK has changed the sales outperformance gap with John Lewis by 22% between the first quarter and fourth quarter, showing that Dixons’ pricing, service and range improvements are gaining momentum.  

Mike Dennis, analyst at Cantor Fitzgerald

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Dixons Carphone delivered a blockbuster quarter with group like-for-likes of 9%, well ahead of consensus for a 4% increase and comfortably beating the 7% like-for-likes delivered over the third-quarter peak.

The merged entity continues to enjoy its buoyant honeymoon period since its union last year, despite being in the foothills of the journey to double the value of the group over time. Robust trading and signs of competitor retreat in the core UK and Nordics consumer electronics bode well as a firm foundation for future growth and the aspiration to double the group’s equity value.

David Jeary, analyst at Cannacord Genuity

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A particularly strong UK like-for-like result in the fourth quarter (+13%) comes at a stark contrast to Argos’s comments about a negative performance year to date and John Lewis’s year to date electrical sales decline, and confirms our expectation that Dixons Carphone has been dominating its home market.

The strength comes across a broad range of product categories but it is worth highlighting that the Carphone side of the business has still been performing above the Group average. The Greek strength, against all odds, is testament to the Greek management team’s efforts, and complements a robust end to the year. This should in our view lift any concerns that political uncertainty in the country creates any headwinds for the company.

Dixons Carphone has in our view the most solid earnings outlook in our coverage universe. Phones 4U’s bankruptcy will continue to prove significantly earnings-accretive for Dixons Carphone throughout 2015.

Christodoulos Chaviaras, analyst at Barclays